China Guodian Boosts GD Power Stake for $405 Million

China Guodian Corp. will increase its stake in publicly traded unit GD Power Development Co. for 3.07 billion yuan ($405 million) as part of a government plan to separate ownership of power plants from grid networks.

China Guodian, one of the nation's five biggest power generators, will raise its stake to 61.82 percent from 37.58 percent, GD Power said in a statement to the Shanghai Stock Exchange. The parent company will buy the stake from Liaoning Electric Power Co., a unit of State Grid Corp. of China, the bigger of the country's two electricity distributors.

The share sale by Liaoning forms part of the 9,200 megawatts of state-owned power capacity that was auctioned by the government, GD Power said in the statement. China wants to separate the control of power plants from the network carrying the electricity to bring the nation nearer to global practices and improve the stability of supply.

China Guodian will fund the acquisition from either its own capital or bank loans, according to today's statement.

The Chinese government sold 9,200 megawatts of power assets owned by state power distributors to domestic and overseas companies for 18.7 billion yuan, the State Electricity Regulatory Commission said May 31. Companies including China Guodian and China Resources Power Holdings Co. signed purchase agreements on May 30.